Ron led a discussion on organizational transformation in pursuit of innovation as part of the CNEXT Generate Program for Senior…
How a positive high-performance culture can reap the biggest rewards.
In my career, there have been many things I am fortunate enough to be proud of. Yet one of the things I feel most strongly about is the culture we created during the ten years I was at Aetna, and its enduring impact. In my experience, it is the leader – the CEO – who plays the crucial role in creating and “owning” an organization’s culture, setting the tone, and executing on that consistently. We know a culture doesn’t just happen; it is the result of what you do every day.
I believe in the power of a positive, high-performance culture, which begins with strong ethical values at the core. When I was at Aetna, we worked to create the culture and values with input from our then ~40,000 employees. We felt having employee insights early and often in the process was critical to our long-term success.
The single most important business reason to create a positive high-performance culture is the level and value of information leaders obtain when people are willing to discuss issues and problems. We know failures happen. When they occur, the leader needs to know what happened and what to do. In a negative culture people may try to cover mistakes and problems, and that undermines any real shot at performance improvement. In a positive and supportive culture, people will be more open to having fact-based discussions about problems, thereby allowing leaders to address those issues head on. As I have said many times, people are much more interested in meeting expectations than demands.
Your corporate culture: is it what you think it is?
I was at Aetna during a time of massive change. We were losing $1 million per day on average, and rapidly losing the confidence of members, customers, brokers and investors. Doctors were furious with us. We had also lost the support of our employees. We soon learned that they were demoralized and beaten down because of the poor performance of the company, the strained relationships with our constituents and the constant negativity in the media. Many of our employees were embarrassed to work for Aetna. We could not be successful in rebuilding the company without employees who were engaged and committed to the company’s success. Employees were our most important assets on our path to rebuilding. My job, and the job of the entire leadership team, was to re-engage the employees. Part of that came from working to fix the company so that we could see performance improvements. But we also needed to understand what led to this dysfunctional state.
Something I realized early on in my career: if you ask a leadership team what the culture of a company is, you will get an answer. But the real answer is how the company’s employees answer that question. The CEO’s responsibility is to get alignment between those two answers.
We began a series of activities to communicate with employees, including educating them on the reality of our business and its substantial challenges. We also asked for their input. Working with an outside firm, we developed a survey that was distributed to the entire employee population. And we found that our employees had a lot to say. The first year we conducted the voluntary survey we achieved close to a 90% response rate. We also talked to our employees through focus groups and we took what they told us and created company values, which reflected the beliefs of employees at all levels of the company. We reinforced the legitimacy of the values by using them every single day, but also by incorporating survey action items within our business plans each year. Over time, our management team members were held accountable for improvement on survey action items, and their compensation was tied to their performance related to these survey action items.
We probed a number of areas in the survey, but as just one example, we asked whether employees believed that the company was acting in accordance with its values, and whether in fact their own department and their own leader was. We placed a high value on leadership capability, and for performance evaluations of leaders, it was weighted as important as their business results.
The surveys, among other programs, became a regular part of how we communicated about culture and values, as well as a marker for how and whether our employees felt the same as we did about our culture.
Setting the right tone at the top is key. Consistency makes it work.
Much of a leader’s responsibility in creating a positive high-performance culture is setting the right tone, and acting on it consistently. That day-to-day execution – the tenor and tone – really makes the difference. With one deviation – one exasperating meeting – the CEO can legitimize bad behavior.
A way to reinforce the tone at the top is for the CEO to be clear on his or her expectations of their leadership team. While the CEO drives the culture, they can’t do it alone. The leadership team needs to be actively engaged in and supporting the culture, and the employees need to believe that their leaders are committed to the culture.
Another critical element in setting the tone is handling performance management. However the CEO models and communicates his or her expectations is how people will be held accountable. When conducting a business review in a setting with other executives watching, if results clearly committed to were not achieved, how does the CEO react and respond?
The CEO’s challenge is to signal that failure to achieve business goals is a serious offense for which people will be held responsible, but not at the expense of the person’s character. An example might be, “You missed the goal, you’re not a bad person but you didn’t do what you said. Let’s talk about what we could have done differently, or what we need to do differently going forward.” These are teachable moments, and not just for the person or team most closely involved. Everyone listening will learn both more about the specific issue at hand, but also what accountability means at their company, and how it will be handled when things don’t go as planned.
Understanding the role of the Board in leading from the top.
Since the responsibility for fostering a positive high-performance culture is the CEO’s, that creates a critical responsibility for the Board: to identify a CEO candidate with the right skills, values, and “touch,” and to work with the incumbent to make sure that all those qualities are appropriately deployed. Directors should be mindful of the elements of CEO performance that bear on culture.
The challenge for the Board is that Directors do not spend time with the executive in a routine operating environment – it’s not their job. Yet they must figure out whether the CEO is behaving consistently with the company’s values and its espoused culture, and whether he or she is doing so consistently.
In my experience, there are a few ways for the Board to develop those necessary insights. One is through interaction with other senior leaders rather than solely with the CEO. A second, and in my mind critical element is getting access to metrics. A well-conceived and well-constructed employee survey can be extremely valuable. It can open a window on employees’ cultural and emotional health, and reveal their perspective on the values of the organization. The survey allows Directors to determine whether what they think they see in the CEO and leadership team matches what the organization is experiencing. There may be times for the Board to act on this information – whether by articulating goals, making clear demands, or making a change, to ensure the long-term success of the enterprise.
Ultimately, a high-performance culture is about accountability, and performance is the focus. There may be consequences and breakage, and some people will be let go. In a positive, high-performance culture there should be clarity about what is important for success among all involved, from leaders to the front line. In the best cases, there also is a shared understanding of values and behavior. A positive culture is a high-information culture, and that is a good recipe for strong company performance and employee success.